United States v. $396,589 in U.S. Funds
349 F. Supp. 3d 13
| D.C. Cir. | 2018Background
- The government filed an in rem civil forfeiture action seeking $396,589 seized from payments made by PT Petro to a U.S. company for specialized petroleum parts allegedly destined for Iran via front companies (Royal Pearls, MKS) and controlled by Kambiz Rostamian.
- The payments at issue were wired from banks in Egypt and Qatar to the U.S. company and later seized; the complaint alleges these payments furthered an export-evading scheme violating IEEPA and related export regulations.
- OFAC had designated Royal Pearls, MKS, and Rostamian as Iran-related Specially Designated Nationals involved in procuring components for Iran’s ballistic missile programs.
- The government published notice on an official forfeiture website for 30 days and sent direct notices (mail/email) to known potential claimants; some direct mailings were returned but the government made multiple address attempts and obtained receipt confirmations from some parties.
- No party filed a Rule G verified claim within the prescribed period; the Clerk entered default and the government moved for default judgment and forfeiture.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule G procedural notice requirements were satisfied | Government: published notice and direct notice to known potential claimants; warrants and verified complaint filed | Potential claimants (PT Petro) argued via letter/petition but did not file a Rule G verified claim; some mailings returned undelivered | Court: Notice satisfied Rule G — publication plus reasonably calculated direct notice met requirements; default entry appropriate |
| Whether default permits deeming complaint allegations admitted and supports judgment | Government: default establishes liability for well‑pleaded allegations; court must still independently determine entitlement to forfeiture | No verified Rule G claims filed to contest liability | Court: Default deemed allegations admitted; government met burden to forfeit funds under statutory standards |
| Whether the defendant funds are proceeds traceable to IEEPA violations (18 U.S.C. § 981(a)(1)(C)) | Government: payments were for a purchase order used to evade export restrictions to Iran; shipping documents falsified; OFAC designation supports nexus | No claimant contested on the merits in court | Court: Allegations show funds derived from transactions intended to evade IEEPA/OFAC prohibitions; forfeitable under § 981(a)(1)(C) |
| Whether funds are also forfeitable as proceeds of money laundering (18 U.S.C. § 981(a)(1)(A)) | Government: transfers into U.S. with intent to promote unlawful activity (IEEPA violations) satisfy § 1956 predicate for forfeiture | No verified defense presented | Court: Allegations establish transfers and predicate unlawful activity (IEEPA); alternate ground for forfeiture under § 981(a)(1)(A) sustained |
Key Cases Cited
- Jackson v. Beech, 636 F.2d 831 (D.C. Cir. 1980) (default judgments generally appropriate only when adversary process halted by unresponsive party)
- H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689 (D.C. Cir. 1970) (policy favoring merits and limits on default judgments)
- Adkins v. Teseo, 180 F. Supp. 2d 15 (D.D.C. 2001) (defaulting defendant deemed to admit well‑pleaded allegations)
- In re 650 Fifth Ave. & Related Props., 830 F.3d 66 (2d Cir. 2016) (§ 981(a)(1)(C) forfeiture for property traceable to IEEPA violations)
- Peak v. District of Columbia, 236 F.R.D. 13 (D.D.C. 2006) (courts should protect diligent parties from delay when adversary process halted)